23 May 2015

Social Policy Bond principles are slowly gaining acceptance. Here is the Economist writing about trends in development aid:

Now donors are trying a new approach: handing over aid only if outcomes
improve. “Cash on delivery” sees donors and recipients set targets, for
example to cut child mortality rates or increase the number of girls who
finish school, and agree on how much will be paid if they are met. ... In cash-on-delivery schemes, recipients choose their own paths towards their targets, subject only to basic rules, such as respecting human rights. ... By setting and measuring targets, cash-on-delivery donors hope to spur healthy competition.It’s not what you spend, 'the Economist', 23 May

For my thoughts on applying the Social Policy Bond idea to development click here.

09 May 2015

The EU has contributed €16m to Paramount’s new park in Spain. Russia’s
government is helping to finance a nationalist-themed park near Moscow.
But official handouts are no guarantee of success: 70% of the 2,500
theme parks built in China, many with generous state help, have closed
down or are losing money.Theme parks in Europe: bumpy rides ahead, 'The Economist', 9 May

If governments everywhere didn't waste your money on propping up inefficient industries everywere or bailing out failed banks you might almost think their goal in subsidising theme parks is the single one of keeping us distracted. As it is, it's uncertain whether that is their main goal, or whether they just enjoy speculating on photogenic projects with your money. Why immensely wealthy multinational corporations are thought to be more deserving of help than the poor, or disabled, or the homeless is not obvious.

01 May 2015

David Simon goes a long way toward explaining why policing in Baltimore has gone awry:

How do you reward cops? Two ways: promotion and cash. That's what rewards a cop. If you want to pay overtime pay for having police fill the jails with loitering arrests or simple drug possession or failure to yield, if you want to spend your municipal treasure rewarding that, well the cop who’s going to court 7 or 8 days a month — and court is always overtime pay — you're going to damn near double your salary every month. On the other hand, the guy who actually goes to his post and investigates who's burglarizing the homes, at the end of the month maybe he’s made one arrest. It may be the right arrest and one that makes his post safer, but he's going to court one day and he's out in two hours. So you fail to reward the cop who actually does police work. But worse, it’s time to make new sergeants or lieutenants, and so you look at the computer and say: Who's doing the most work? And they say, man, this guy had 80 arrests last month, and this other guy’s only got one. Who do you think gets made sergeant? And then who trains the next generation of cops in how not to do police work? I’ve just described for you the culture of the Baltimore police department amid the deluge of the drug war, where actual investigation goes unrewarded and where rounding up bodies for street dealing, drug possession, loitering such – the easiest and most self-evident arrests a cop can make – is nonetheless the path to enlightenment and promotion and some additional pay. Baltimore’s Anguish: Freddie Gray, the drug war, and the decline of “real policing.”, David Simon, 29 April

Two points I would make.

One: in our complex society we are going to have to target quantitative indicators. To do so effectively these indicators need to be meaningful to ordinary people must be, or must be inextricably linked to, improvements in well-being. The alternative to such indicators are the sort of Mickey Mouse, micro-targets that motivate the Baltimore police to maximise the number of arrests they make or, for instance, keep patients in UK ambulances hovering outside hospitals so that they can meet a 'seen within 4 hours of entry into hospital' micro-target.

Two: incentives are important. People — even well-intentioned and hard-working people — will react to incentives; and if these incentives are to carry out stupid activities that conflict with society's well-being, then they will carry out those activities and we shall see a decrease in society's well-being. It's not that complicated.

Follow by Email

Search this blog

Social Policy Bonds

See the Social Policy Bonds website for overviews and links to articles, papers, news and more about Social Policy Bonds. Click on the image in the panel below to download a 2400-word article published by the Institute of Economic Affairs, London.

Social Policy Bonds in 2400 words

Social Policy Bonds in the media

25 May 2018: a short article on Social Policy Bonds and their possible application in India, appears on Market Express (India). It is by Dr Ashok V Desai and titled Incentivizing welfare.

9 October 2015: An article by Greg Bearup on the genesis of the Social Policy Bond idea, and application of a version of it in Australia appears in the Weekend Australian Magazine. (The article can also be downloaded as a pdf from here.)

October 2013: Professor Robert Shiller of Yale University, is named as one of the three winners of the 2013 Nobel Prize in Economics. His Nobel Prize lecture (pdf) delivered on 8 December, mentions Social Policy Bonds. Professor Shiller has for many years encouraged my work on Social Policy Bonds, beginning in late 1996 when he sent me this letter.

3 May 2012: An audio talk by Nobel Prize winner Professor Robert Shiller at the London School of Economics, in which Social Policy Bonds are briefly mentioned, is available here.